Applied Business Question 2015

Applied Business Question

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About the ABQ


1 The Higher Level Leaving Certificate Business Paper consists of three sections.
2 Section 2 of the Applied Business Question (ABQ) is a compulsory question.
3 The ABQ consists of a single practical Case Study Business Question – 80 marks are available, representing 20% of the total marks.
4 The text and questions of the ABQ are based on three specified units of the syllabus, out of a total of seven units, which alternate (change) on an annual basis. The 2015  ABQ will be based on Units 2, 3 and 4 of the syllabus, similar to the 2005 and 2010 examination as the ABQ operates on a five-year cycle.

Methodology


This section requires you to Name, Explain and Link for each point. A high level of synthesis (i.e. combining different elements into the one answer) must be established. Evaluation may be also required.
In answering the questions on the ABQ candidates must explain and make use of relevant knowledge/theory (and understanding) gained in the subject while studying the course in addition to the relevant links from the ABQ.
Linking of points made in your answer with the text by relevant quotes/phrases/statements from the ABQ is essential. It is recommended that you present the link/quote in a different colour ink. A DIFFERENT/SEPARATE link is required for each point of theory made within each part of the ABQ. A link will not be awarded marks without having the relevant theory attached.
Read the ABQ provided in full before reading the questions, then go back and highlight the relevant points/links in the text.
Present your answers to each part of the question in point form and be sure to link or quote from the text of the ABQ in your answer, even if you are not specifically requested to do so.
The methodology that must be used can be seen by looking at the structure of the sample answer to the question from the Leaving Certificate ABQ in 2010, as shown below.

Sample Q & A


Sample 1 – ABQ suitable for Leaving Cert 2015

Biotech Animalcare Ltd
animal_careEdward Brown had long thought about setting up his own business. He was ambitious well-educated and had worked successfully for a number of large multinational companies. He felt that he had a lot of fresh ideas and was not afraid to try them out. In 2013, Edward decided to establish Biotech Animalcare Ltd, which developed a portable blood analyser for veterinarians (vets) who needed rapid diagnostic results at the animal’s side. At present blood samples are collected and have to be sent to a clinic for analysis whereas with the new technology results would be available in minutes.

In 2014, Edward left his secure position in a Multinational company and works full-time in Biotech Animals Ltd because of all the challenges to be met in a new start-up. Initially, Edward got financial advice from Joseph Ferris, a local bank manager. Joseph states that the availability of working capital and finding suitable sources of finance are two important issues. Biotech Animalcare Ltd will need money to pay regular bills, such as electricity, telecommunications, wages and the purchase of stock. Machinery for the production of the blood analyser, office equipment and delivery vans will be required. As a start-up company they may not be in a position to purchase a premises and will have to consider leasing a suitable location.

Having worked in senior management positions, Edward knows the importance of planning things out well from the start. Biotech Animalcare Ltd’s mission statement was “to focus on providing a technological solution for veterinarians – anywhere, anytime and instantly.” In a short time Biotech Animalcare Ltd is marketing a portable blood analyser that can carry out a complete blood count. In 2015, Edward has decided to undertake a sales promotion campaign featuring gifts and prizes for vets to increase sales. In the long-term, Biotech Animalcare Ltd plans to extend their product ranges and to expand into other markets such as the U.K.

1(A) Being decisive, creative and prepared to take risks are the personal characteristics often associated with an entrepreneur.
Discuss these characteristics and support your answer with reference to Edward Brown.
(20 marks)

Sample Answer (1A)

1 Decisive: Entrepreneurs have the ability to make quick and clear decisions so as not to miss opportunities, the issue of timing may be crucial (e.g. decisiveness when dealing with suppliers and contractors). They take full personal responsibility for the actions and decisions they make.
Link: In 2013, Edward decided to establish Biotech Animalcare Ltd, which developed a portable blood analyser for veterinarians (vets) who needed rapid diagnostic results at the animal’s side.
2 Creative: Entrepreneurs are good at coming up with new ideas or new ways of doing things, ‘thinking outside the box’. They expand their minds to what is beyond the ordinary through research and the collection of data. They have the ability to see things in new ways. They are prepared not only to be different but also tend to have a vision of the future.
Link: Edward felt that he had a lot of fresh ideas and was not afraid to try them out.
3 Take Risks: Successful entrepreneurs are not afraid of failing. They embrace failure as a learning experience. They take both financial risks and personal reputational risks but try to minimise both. They take measured and calculated risks which provide a reasonable and challenging chance of success. They take chances when opportunity strikes.
Link: In 2014, Edward left his secure position in a Multinational company to work full-time in Biotech Animalcare Ltd because of all the challenges to be met in a new start up.
1(B) (i) Explain the term “Working Capital.”
(ii) Identify and describe the most appropriate source of finance that Bank Manager, Joseph Ferris would have recommended to Edward Brown.
(30 marks)

Sample Answer (1B)

(i) Working Capital = Current Assets – Current Liabilities.
The money available for the day-to-day running of the business. If a firm does not have enough working capital it has a liquidity problem and may be unable to pay its debts as they fall due.
(ii) Sources of finance:
These can be classified under short, medium or long-term. Biotech Animalcare Ltd. will need finance under each of these headings.
Short Term – Finance available for less than one year e.g. Creditors, Taxation.
Bank overdraft is when the holder of the account is granted permission from the bank to withdraw more money than is in the account, up to a specified limit.
Link: Biotech Animalcare Ltd. require finance to pay regular bills such as electricity, telecommunications, wages and purchases of stock.
Medium Term – Finance available for more than one year and less than five years. This includes hire purchase, leasing and medium term loans.
Hire purchase – Refers to the buying of assets where an initial deposit is paid and the balance is paid through instalments. The buyer does not become the legal owner until the final instalment is paid.
Link: Machinery for the production of the blood analyser, office equipment and a delivery van will be required.
Long Term – Finance available for over five years. These include long-term loan, retained earnings, owner’s capital and share capital.
Mortgage – Is a long-term loan where property is offered as security. This means the title deeds are given to the lender and if the borrower defaults the financial institution can sell the asset to recoup the amount of the loan outstanding.
Link: As a start-up company, Biotech Animalcare Ltd. may not be in a position to purchase premises and will have to consider leasing a suitable location.
1(C) (i) Define the Management activity of “Planning”.
(ii) Illustrate how different types of planning benefit Biotech Animalcare Ltd.
(30 marks)

Sample Answer (1C)

(i) Planning is the setting down of specific goals and objectives and the putting in place of strategies that allow you to achieve the stated goals and objectives of the business. Planning forces a business to consider its future and how it will achieve continued success. Plans give a business purpose, direction and reduces risk and uncertainty.
(ii) a. Mission Statement: This is a visionary statement outlining what the business is, what the business does and where the business is going. It benefits the business as it provides stakeholders with an insight into the objectives of the business.
Link: Biotech Animalcare Ltd’s mission statement is “to focus on providing a technological solution for veterinarians anywhere, anytime and instantly.”
b. Strategic Planning: This is long-term planning covering a period of a number of years (e.g. five years). It is usually drawn up by top management and it outlines how the long-term goals of the firm are to be achieved. Strategic planning benefits a business because it prioritises goals and objectives and encourages long-term thinking among senior management. It is also useful for measuring and controlling the performance of management. The objectives set out within a company’s strategic plan should be closely aligned to its mission statement.
Link: In the long-term, Biotech Animalcare Ltd plans to extend its product ranges and to expand into other markets such as the U.K.
c. Tactical Planning: This is short-term planning which breaks the strategic plan into shorter more manageable periods of one to two years. It deals with the ‘now’ part of the plan. It is usually drawn up by middle level managers. Tactical planning will benefit Biotech Animalcare Ltd because it will facilitate the attainment of the overall strategic plan/long-term goals. It will also be useful for measuring and controlling the performance of management.
Link: In a short time Biotech Animalcare Ltd is marketing a portable blood analyser that can carry out a complete blood count. In 2015, Edward has decided to undertake a sales promotion campaign featuring gifts and prizes for vets, to increase sales.

Sample 2 – ABQ suitable for Leaving Cert 2015


Castlewest Hotel and Conference Centre
abq_2010Castlewest Hotel and Conference Centre was established by Mary Cullen in 1994. Having worked in senior management positions within the hospitality sector for many years, Mary identified a niche in the local market for a hotel providing a high standard of service and comfort, while offering customers value for money. Located in the west of the country, Castlewest Hotel and Conference Centre enjoys an excellent reputation for delivering a personal and professional service to holidaymakers, businesses and passing trade. Independent online reviews of the hotel continue to compliment the very helpful and friendly staff. The hotel was totally refurbished and extended to include a state-of-the-art Conference Centre in 2005.

A significant investment in Information and Communications Technology (ICT) has taken place within the hotel in recent years. The Marketing Manager, Pat Butler, redesigned the website to include an on-line booking facility, which also provides a customer database. Complimentary Wi-Fi (internet access) is available throughout the hotel, while the Conference Centre is equipped with the latest video and audio conferencing facilities. Technology is also used in the day-to-day operations of the hotel, from stock ordering to managing the hotel’s accounts.

Mary Cullen adopts a hands-on approach in her role as General Manager and can be seen daily walking around the hotel, talking to staff and customers and getting feedback. Despite her long working hours, she is also president of the local Chamber of Commerce. Using the hotel intranet, Judy O’Brien, the Assistant Manager, provides a weekly update to all staff on the hotel’s performance. She has also developed a voluntary suggestion scheme where staff are encouraged to come up with innovative ideas for improvements, for which they are rewarded. Recently Dylan Jones, the Head Chef, was named ‘Employee of the Month’ for introducing a ‘Lunch to Go’ menu, which has increased weekday lunch sales.

Bookings and sales overall have fallen in the past 18 months, as individuals and businesses have cut spending. Hotel rates have been reduced in an effort to attract more business, and a range of cost-cutting measures were introduced, including closure of the hotel for the month of January. Further cuts will be necessary to ensure the continued viability and success of the business.

(2A) (i) Explain the term ‘intrapreneur’.
(ii) Illustrate, using examples from the above text, how ‘intrapreneurship’ benefits Castlewest Hotel and Conference Centre.
(20 Marks)

Sample Answer (2A)

(i) An intrapreneur engages in entrepreneurial activity and comes up with new ideas within the business in which he/she is employed. Intrapreneurs need the freedom and resources (human and capital) to pursue their ideas.
(ii) Benefits of intrapreneurship to the Castlewest Hotel and Conference Centre include:
a. New Products identified: Intrapreneurship results in new products/services being developed. Intrapreneurs are champions of change, looking for ways to grow and expand the business constantly, to improve the business process or product for the business in which they are employed. New product and market development is very important to ensure the continued viability of any/all businesses.
Link: Recently, Dylan Jones, the Head Chef was named “Employee of the Month” for introducing a very popular ‘Lunch to go’ menu, which has increased weekday lunch sales.
b. Business Growth / Success / Profitability: Staff through their loyalty and hard work contribute to the growth and success of the business over the years, resulting in many new procedures being introduced into the business.
Link: Judy O’Brien has also developed a voluntary suggestion scheme where staff are encouraged to come up with innovative ideas for improvements, for which they are rewarded.
c. New Ideas: Various ideas introduced result in greater productivity in the business. Many new ideas and cost cutting measures introduced result in greater profitability in the business. An on-line booking system will result in lower administration costs, as customers complete their bookings on-line, and increase the profit margins for the firm (fewer personnel required etc.).
Link: The Marketing Manager, Pat Butler, redesigned the website to include an on-line booking facility, which also provides a customer database.
d. Improved Working Conditions: More enjoyable workplace/nurturing of in-house talent to promote innovation. Where staff are offered the opportunity to be intrapreneurial they are generally more productive, happier and more fulfilled in their work. They enjoy and are committed to what they do. There is greater motivation and improved industrial relations which saves time and money in the business.
Link: Using the hotel intranet, Judy O’Brien, Assistant Manager, provides a weekly update to all staff on the hotel’s performance.
(2B) Discuss the impact that investment in technology has had on Castlewest Hotel and Conference Centre. Refer to the above text in your answer.
(30 marks)

Sample Answer (2B)

Impact from investment in technology includes the following:
1 Marketing / Market Research / Advertising: Many businesses now use the internet to market their goods and services. By creating a website, a large number of potential customers can be reached at minimal cost. It allows for global advertising and can reach a worldwide market. The Website can be used to promote facilities and services and highlight special offers available to a global audience. On-line booking is easier and more convenient for customers. Databases of customers can be used for market research purposes. The internet can be used for both primary and secondary market research.
Link: The Marketing Manager, Pat Butler, redesigned the website to include an on-line booking facility, which also provides a customer database.
2 Communication: ICT provides opportunities for instant communication, both internally and externally. Staff can be equipped with laptops, mobile phones and e-mail. The internet/intranet can be used to communicate with customers, suppliers and staff. Video-conferencing and audio conferencing may be used by corporate clients organising external business meetings.
Link: Weekly updates to all staff on the hotel’s performance, using the hotel intranet.
3 E-Business / Operational Efficiencies: Many business functions can be carried out using the internet e.g. Electronic Data Interchange (EDI) where stock can be ordered automatically from suppliers when supplies go below a certain level. (i.e. online stock ordering). Stock outs are avoided, while stock ordering and holding costs are kept to a minimum. Customers can book on-line (i.e. online payments) and credit card bookings can be taken over the phone.
Link: Technology is also used in the day-to-day operation of the hotel, from stock ordering to managing the hotel’s accounts.
4 Competitive Advantage: The existence of up-to-date technology in a business enables it to become more competitive than other similar businesses. Business clients may choose the more technologically advanced hotel.
Link: Complimentary Wi-Fi (internet access) is available throughout the hotel, while the Conference Centre is equipped with the latest video and audio conferencing facilities.
(2C) Evaluate how Mary can use her management skills to ensure the continued success of her hotel. Refer to the above text in your answer.
(30 marks)

Sample Answer (2C)

1 Leadership: Leadership involves directing and assisting people in order to ensure work is done effectively so that objectives can be met. Leadership allows an individual to positively influence how others behave so that they contribute voluntarily to achieving group goals. Mary is a democratic leader, adopting a democratic and facilitative approach to managing. She takes a hands-on approach to running the business and delegates responsibility where appropriate. She takes decisions only after discussions with staff and customers. Shared solutions to problems are sought by democratic leaders. Good leadership encourages an enterprise culture within business. Opportunities exist for staff to put forward suggestions for improvement. These suggestions are actively encouraged, rewarded and acknowledged.
Link: Despite her long working hours, Mary is also president of the local Chamber of Commerce.
Evaluation:  In my opinion Mary is an effective and successful leader, who has used her leadership skills to foster a business climate that supports intrapreneurship. The Head Chef, Marketing Manager and Assistant Manager all used their own initiative to introduce improvements in the business. In my opinion staff creativity is actively encouraged and rewarded, with the necessary freedom and resources (human and capital) provided to pursue their ideas.
 2 Communication: Communication involves people exchanging information in order to better understand each other. Changes to existing work practices should be made in consultation with staff. The use of a consultation process implies that good two-way communication exists. Mary Cullen communicates regularly with staff, and actively encourages staff to put forward suggestions for improvements, for which they are rewarded. She values her staff, and recognises the contribution that they have made to the business. She encourages feedback from staff and customers. This allows any confusion or misunderstandings to be resolved quickly.The advanced ICT allows communication to be efficient, speedy, and accurate.
Link: The Assistant Manager is responsible for providing a weekly update to all staff.
Evaluation: In my opinion the hotel has invested heavily in its ICT infrastructure which provides and supports many opportunities for change. Mary and her team are well positioned to design and implement the changes necessary to secure the viability and continued success of the Castlewest Hotel and Conference Centre. An effective system of communication exists between management, staff, customers and suppliers.
 3 Motivation: Motivation involves putting factors in place that cause people to behave in certain ways. People’s behaviour can be influenced by motivating them to meet their unsatisfied needs. Employee motivation is the key to achieving extraordinary results.

Maslow’s Theory of Motivation/Mc Gregor’s Theory X and Theory Y.

The staff at Castlewest Hotel is motivated, very helpful and friendly. They have seen the business expand and experienced change over the past 16 years. The hotel enjoys an excellent reputation. They are keen to work hard and have high levels of commitment. They get great satisfaction from their work. A positive work atmosphere exists.

Link: Independent on-line reviews of the hotel continue to compliment the very helpful and friendly staff.
Evaluation: In my opinion the enterprise culture within the Castlewest Hotel and Conference Centre has engendered loyalty amongst the staff. Staff are hardworking and committed to providing a professional and personal service to all clients. They are noted for their friendly and helpful nature, and they have introduced various changes and initiatives that have benefited the business.

Student Activity – Sample ABQ


Healthy Snacks

Sheila Murphy, with twenty years’ experience in catering, had a number of senior positions in large businesses and always got on well with people. However, she long had ambitions to set up her own business. Sheila Murphy launched her range of crisps in 2005. These crisps are baked rather than fried, low in fat and gluten-free. Thousands of health conscious consumers were initially introduced to Sheila’s Snack brand through negotiations with road race organisers to include crisps in their race goody bag.

The business had developed very well since and she now employs forty people producing a wide range of healthy snacks. Sheila organised the firm so that as many employees as possible were organised into teams and involved in making the decisions. She liked people with initiative to work for her, especially those who would stick with jobs, spot challenges early and find solutions quickly. She allowed her staff to deal with customers directly, paid them well but expected targets to be met. Over the past ten years the food business has changed a lot, especially in the areas of quality, customer service and in stock and financial management.

Healthy Snacks has seen sales decline by over 40% in recent months. Sheila knows that to ensure business survival, changes will have to be made. Over her twenty years’ experience in business she has seen a lot of changes introduced especially in the areas of ICT, work practices and customer service. Change always caused difficulties but Sheila feels the best approach is to communicate with staff to tackle the challenges. The people in Healthy Snacks are some of the most talented and committed in the industry.

(A) Illustrate, using examples from the above text, four enterprising characteristics/skills shown by Sheila.
(20 marks)
(B) Analyse the management activities used by Sheila in the running of her business. Refer to the above text in your answer.
(30 marks)
(C) Evaluate the strategies that Sheila could use to successfully manage the change process in the business. Explain your answer fully.
(30 marks)

Template for Solution

(A) – Four enterprising characteristics/skills…

1 Sheila is a risk taker.
Possible links to text could include:
2 Sheila is innovative/creative.
Possible links to text could include:
3 Sheila is decisive.
Possible links to text could include:
4 Sheila shows leadership.
Possible links to text could include:

(B) – Management activities…

1 Planning
Possible links to text could include:
2 Organising
Possible links to text could include:
3 Controlling
Possible links to text could include:

(C) – Strategies to successfully manage the change…

1 Senior management commitment
Possible links to text could include:
2 Effective communication
Possible links to text could include:
3 Change in management style from ‘controller’ to ‘facilitator’.
Possible links to text could include:
4 Rewards:
Possible links to text could include:
Evaluation: